If you are looking for ways to invest your money, starting a unique business is a place to do it. According to a report, some start-ups in America continue to rise despite the pandemic.
Building your own business can have its challenges, especially in finances. That’s why you need to know what can help you beforehand during these times.
One of the things that you should know before starting a business is the Uniform Commercial Code. Do you want to know more about UCC? In this guide, you will learn all about UCC law.
As per the ULC, UCC is a set of laws covering all commercial transactions in the United States. It’s not federal law but a uniformed law adopted by all states.
The Uniform Commercial Code consists of nine articles. These articles cover the sale of personal property and business transactions. These include borrowing, leasing, and selling goods or other items such as vehicles.
UCC Article and UCC Legislation
As mentioned, the Uniform Commercial Code includes nine articles. These articles address different commercial transactions in America. Here are the clauses inside the Uniform Commercial Code.
- Article 1 – contains the “General Provisions and Definitions”
- Article 2 – pertains to the “Sales”
- Article 2A – talks about the “Leases”
- Article 3 – has the “Negotiable Instrument”
- Article 4 – determines “Bank Deposits and Collections”
- Article 4A – explains “Fund Transfers”
- Article 5 – states the “Letters of Credit”
- Article 7 – has the “Documents of Title”
- Article 8 – discuss the “Investment Securities”
- Article 9 – shows the “Secured Transactions”
The Uniform Law Commission or the NCCUSL handles all UCC legislation. Together with the ALI, they oversee the implementation and development of UCC laws.
Depending on the state, articles may vary, so check your state’s UCC law. For example, Louisiana does not apply Article 2 in its UCC law.
UCC filing, also called liens or UCC-1, are legal documents that creditors file. It’s a public notice that the lender may claim the collateral that the debtor promises. Also, depending on the state you live in, UCC filing procedures may vary.
Before applying for a business loan, it’s vital to do UCC and lien searches first. Here is the information on a UCC-1 form:
- Creditor’s name and address
- Debtor’s name and address
- Collateral description
There are two types of UCC-1, one is against specific collateral, and the other is blanket liens. The first one gives creditors interest in one asset rather than all assets owned by the business.
Blanket liens give the creditor interest in all assets owned by the lender. Lenders prefer this because it’s less risky and more secure.
UCC-1 lasts up to five years, but your lender may renew it if your loan is still active. After your payment is complete, you may file a UCC-3 to stop your loan.
Other Uniform Commercial Code Information
Lenders file the UCC-1 at the Secretary of State’s office where the debtor lives. Also, if you want to know if you have existing liens, check the SOS website.
Uniform Commercial Code has fees, and the price depends on the state. In New York, paper filing is $40, while electronic filing is $20.
Did you find this guide about the Uniform Commercial Code helpful? Check out our other articles, too!